I’ve been confused about Social Security and how Chained-CPI affects the program in the long term. Starting benefits are calculated by adjusting all of your top 35 years of work into current dollars. For example, the Social Security Administration says that your income in 1951 should be multiplied by 14.89 to get to its current value. This means the CPI over the years doesn’t matter—at least directly. What it does mean is that income inequality is slowly destroying the program, but that’s another (very important) matter.
Chained-CPI is still a really bad idea. I look at it this way: if someone is going to screw me over, the least they can do is admit it. This “technical fix” is just a way to cut benefits in the program without admitting it. And notice, the government has already greatly cut benefits by raising the retirement age up to 67. That too was a way to avoid looking like they were cutting the program. Of course, for the guy who dies one day before his 67th birthday, it is a very big cut indeed.
Josh Barro takes on this issue as directly as anyone I have seen. And he defends Social Security to boot:
This is the key point about chained CPI, often glossed over by its advocates. Adopting it is just another way to cut Social Security benefits. So it’s only a good idea if cutting Social Security benefits is a good idea…
I think Social Security is one of the best values among federal programs and that the U.S. faces a retirement-savings crisis that will be exacerbated if we cut old-age benefits. I think we should cut elsewhere.
This is from a conservative—admittedly, a really smart one. But it goes along with what pretty much everyone agrees with: Social Security is a good program that we should protect. The rest is just a matter of good government. If we are going to cut the program, let’s talk about that. Backdoor means of cutting the Social Security is just wrong.